VISAKHAPATNAM: The proposal to set up a major port at Duggarajapatnam in Nellore district appears to have hit a roadblock as both the central and state governments are yet to take up the mega project in the state.

Union shipping minister Nitin Gadkari, in reply to a question posed in the Lok Sabha on Thursday, stated that the ministry of shipping has instructed Visakhapatnam Port to prepare a revised feasibility report for the project in view of the AP government expressing its inability to meet the cost of the land, rehabilitation and resettlement, and external infrastructure cost.

The minister informed the Lok Sabha that the project development cost is estimated to be Rs 17,615 crore and the phase one expenditure is estimated to be Rs 6,091 crore.

“Though originally the land cost, rehabilitation and resettlement cost and external infrastructure cost were to be borne by the government of Andhra Pradesh, the state government has expressed its inability to bear these costs, which has impacted the viability of the project,” the minister stated.

The Dugarajapatnam Port in AP was announced along with the Sagar Port project in West Bengal during the Union budget of 2013. The Dugarajapatnam Port project was supposed to be the second major port to come up in AP after the Visakhapatnam Port in Andhra Pradesh.

However, sources at the Visakhapatnam Port Trust (VPT) said the mega port project is as good as shelved as the state government has expressed its inability to provide land and the central government has indicated that it will be unable to provide viability gap funding (VGF) to the project.

“When the central government made VPT a partner for the project, we were under the impression that VPT will have to use some of its internal resources for development of the port along with support from the central government in the form of VGF. The VGF is around Rs 3,000 crore and VPT will not be able to take the project forward on its own,” a senior VPT official said.

However, he said there has been no instruction as yet from the ministry of shipping for undertaking a revised feasibility report for the project as of now.

Meanwhile, industry sources said that the state government is already planning three minor ports in AP at Bhavanapadu, Narsapuram and Ramayapatnam. “Nellore already has a minor port operating at Krishnapatnam and the state government is keen on developing Ramayapatnam Port. So the state government may not want to acquire land and pay out compensation package for a project from which it may not get higher revenues as compared to a minor port,” said the CEO a shipping company.